Wednesday, December 27, 2006

New Congress Can Reshape Antitrust Policy: Antitrust Organization

With new Democratic majorities in both Houses, the New Year presents Congress with an opportunity to reshape the direction of antitrust policy, according to a paper issued December 19 by the American Antitrust Institute (AAI). However, the White House’s veto potential and control over the enforcement agencies suggest that 2007 should be year “to build a record rather than to focus on the passage of new legislation.”

“An Antitrust Agenda for Congress in 2007,” written by AAI President Albert Foer, recommends that Congress hold hearings on antitrust policy and consider an economic summit or special study commission “designed to place antitrust within a national economic policy rather than as a microeconomic specialty.”

The Senate antitrust subcommittee will likely be able to hold about eight hearings (compared to approximately three last year). The House, lacking an antitrust subcommittee, will be able to conduct only “a handful of full committee hearings.” The paper suggested the following hearings topics:

Remedies against cartels. The Justice Department’s leniency program has been a great success and is being replicated around the world. It should be reviewed in a positive way. Important research has shown that sanctions against cartels were based on data substantially understating the magnitude of harm caused by the cartels. Moreover, the Class Action Fairness Act’s impact on class actions to recover cartel overcharges should be examined.

Enforcement of antimonopolization statutes. Congress should decide whether it wants Section 2 of the Sherman Act more vigorously enforced. The federal agencies have almost eliminated monopolization enforcement. Another issue is how effective the remedies in the Microsoft case have proven to be. The growth of “power buyers” (such as Wal-Mart), and the potential antitrust problems caused by such parties, should be studied.

Current merger policies. In light of the new merger wave, the effectiveness of current merger policies should be evaluated. Controversial mergers that have been approved (Whirlpool/Maytag, Wal-Mart/Amigo Supermarkets) should be reviewed, as well as mergers in the telecommunications and airline industries. “We are in an unprecedented period of merger non-enforcement by the agencies,” according to Foer, who pointed out that neither the FTC nor the Department of Justice has litigated a case in almost three years.

Intellectual property. “The misuse of the Intellectual Property laws at the expense of competition has become of increasing concern,” the agenda states. Hearing could “tease out” the difference of opinion between the DOJ (which tends to take a pro-property position) and the FTC (which has criticized the IP laws and institutions).

Petroleum industry. Congress could examine whether the FTC has adequately developed the case for antitrust intervention” in the refining portion of the petroleum industry.

Information to improve enforcement. Hearings could address how the FTC and DOJ can better obtain relevant data to assist in antitrust enforcement.